The MVNO space is becoming crowded, particularly in the UK. Established brands such as Tesco and Virgin continue to gain customers, while major players such as Sky are also competing for opportunities to grab share.

But at the same time, mobile operators across the globe are increasingly launching ‘sub-brands’ that directly compete with MVNOs and target specific segments – such as Vodafone’s VOXI and Three’s SMARTY. So, how can MVNOs stand out?

According to experts, innovation is about much more than just price: firms need a strong value proposition including unique additional services. Take the example of Sky Mobile, which has taken steps to differentiate itself by becoming the first UK network to let customers cash in their unused data in exchange for savings on a range of phones, tablets and mobile accessories.

Another stand out offering is the Superdrug MVNO launched in June running on the Three network, says James Gray, Director at Graystone Strategy. He explains: “You have to be a member of the Superdrug loyalty scheme to join and it enhances your membership with initiatives such as double points.”

Solutions such as these are a recognition that MVNOs need to offer more than just minutes and texts, according to Kester Mann, Analyst at CCS Insight. But at the same time, the number of areas an MVNO can target is diminishing, especially in the UK, he points out. “The UK market is reaching maturity and saturation: We might see new players, but there will also be some casualties.”

Amid this competitive market, MVNOs need to think what they can offer beyond connectivity, says Gray. “If you are going to become an MVNO, you need at least one clear point of differentiation – and price probably isn’t it.”

Gray cites the example of ethnic MVNO Lebara, which addressed a customer need by adding money transfer services to its core offering. “It is about building in an iterative way: Start out, then update and add to the offering. You don’t need to launch everything all at once. You can bring things out and if they work, then great and if not, you haven’t lost anything.”

Reverent offerings

There are multiple solutions that can help to differentiate an MVNO. “It is about being the most relevant to the customer and the most strategic for the business,” says Shanks Kulam, Co-Founder, x-Mobility.

For example, AppVNOs such as Vyke offer additional numbers to customers. “Innovation is about using the features of an MVNO to offer the services your target audience wants,” says Iqbal Maricar, VP Far East, Vyke. “This is even more true now that an MVNO doesn’t need to be a replacement Sim but can instead supplement an existing Sim-based contract.”

Another MVNO innovating through its service is FreedomPop, which offers a free option on its basic plan. “Modern MVNOs need to be disruptive and flexible, and to provide mobile services that customers want,” says Nicholas Constantinopoulos, President of International, Freedompop. “The flexibility of the MVNO model means we can provide a completely free solution to subscribers, but we also give them the flexibility to customise it if they choose to pay for additional services.”

Meanwhile, cloud gaming firm PlayGiga offers a “Netflix of video games” as a white label service to telecoms providers. “Telcos are looking for content to expand their service, monetise the network, or reduce churn,” says the firm’s CEO Javier Polo.

PlayGiga’s service allows MVNOs to incorporate cloud gaming into their offerings without the need to invest in content or infrastructure, he explains.

The company can provide the service via a set top box, PC or smart TV. According to Polo, the opportunity for gaming services as an additional revenue source for mobile operators and MVNOs will increase as 5G enters the fray. “Telcos can include a Sim card in a set top box and fibre-like connectivity could be provided by 5G.”

Another way in which MVNOs can differentiate themselves is by bundling telemedicine and pharmacy savings with a rewards programme, says Rob Webber, CEO and Founder of MoneySavingPro. He cites the example of ROK Mobile, adding that he thinks more similar services “are likely to follow”.

An additional model could see MVNOs using data about their customers to offer services such as loans. Steve Polsky, Founder and CEO of Juvo says MVNOs can use data about prepaid subscribers to cross-sell and upsell alternative services, such as airtime loans and handset financing. “Operators can offer minor credit extensions and then – based on the subscriber’s payback behaviour – can begin to generate a financial identity, similar to a traditional credit score.”

Customer experience

In an age of competition around customer experience, MVNOs can also stand out by offering self-service capabilities. Michael MacAuley, General Manager at Liferay UK and Ireland, says GiffGaff has done well in this area, by providing customers with the ability to service themselves and each other.

It’s a competitive market, but there is huge potential for the MVNOs able to innovate through their solution and strategy. But it requires entirely new thinking, and a change in technology architecture, says Tony Regan, Head of Openet Consulting.

He points out that many operators are embracing change through ongoing digital transformation strategies. “The net result is more personalised services, better engagement and retention, and healthier revenues. MVNOs have to rise to the opportunities afforded by digital transformation journeys too. With a vastly reduced cost base and the freedom to move quickly, MVNOs have the most to gain.”

For now, Gray thinks it is important for existing MVNOs to examine their customer base and identify “what the next need is”. He explains: “If they have established their brand in telecoms, they can add new features. Consumers are becoming more comfortable and buying multiple products from one brand as long as they trust it.”

He points to Graystone Strategy’s research, showing 50% of customers would buy mobile services from their broadband provider, while 19% would buy from their gas and electricity supplier.

There are also many more vertical areas where MVNOs can specialise, especially on the enterprise side. Gray predicts growth based on internet of things (IoT). “There is an opportunity for MVNOs in that area. They tend to be a bit more fleet of foot and can react quickly to changing markets.”

3 comments

Today with many MNOs launching sub brands to compete with MVNOs is a distinct threat to MVNOs. Many MVNOs also do not provide roaming services to their subscribers or provide with lot of roaming restrictions. Being in a business whose fundamental purpose is to offer mobility, restricting roaming is counter intuitive. As a result customers may not see MVNO offerings as a perfect substitute of MNO offerings.

Roaming revenue and restrictions are on the decline. Additionally, less than 25% of all mobile users travel outside of their country each year. In this business, it’s about data & differentiation, not substitution (at least not at the go-to-market strategy). Customers only know what they want, however they don’t understand what they need. The rise of the new digital service providers are growing, and we’ll see traditional MVNO and wholesale models evolve through APIs as operators transform their business and network infrastructures. The competition is speed and agility.

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